Dangote Cement Profit Rises by 3% in Q1 Despite Price Hike
Dangote Cement Plc profit grew by less than 3% year on year in the first quarter of 2024, despite market-wide price adjustments on cement products.
According to details from its unaudited financial statement for the period, the company’s profit rose by 2.9% to settle at N112.67 billion from N109.50 billion in the comparable period in 2023.
Rising costs were the deal-breaker for the company. Topline experienced a significant surge in the first three months of operation in 2024 compared with its record achieved 12 months earlier.
The market witnessed a hike in cement prices in the first quarter of the year as a results of fast rising inflation conditions, interest rate hike and the naira fluctuation, which shifted producers costs.
The price increase and volume growth drove revenue higher. Dangote Cement Plc reported more than 100% year-on-year growth in revenue, which peaked at N817.35 billion in Q1-2024 from N406.72 billion in the comparable period.
Dangote Cement output expanded by 12.3% year on year to 7.04 Mt, following the 26.1% recovery in Nigerian output,, which printed at 4.6Mt,t and steady performance in Pan-African output, up by 3.1% to 2.7 Mt, according to CardinalStone Securities Limited.
In addition, the company reported an 87.2% year on year jump in Nigerian exports of clinker (178Kt) and cement (86Kt) to Cameroon and Ghana. Analysts noted that management cited the impact of geopolitical concerns in Niger on the lower cement export volumes.
Pressure from Nigeria’s untamed inflation filtered through the company’s cost profile. Dangote Cement’s cost of sales rose by 143.3% year on year, according to details from Q1-2024 unaudited financial statement. The key driver of the increase was fuel & power consumption, which rose by 220.9% year on year to N181.9 billion.
Both selling and distribution, including administrative costs, rose sharply, while interest payments on borrowings spiked significantly. These tailwinds dragged the effects of the cement company’s solid revenue growth on the bottom line.
The notable strain on gross margin emanated from a 221% increase in fuel & power spending and about 104% year-on-year growth in the cost of material consumed.
Its unaudited financials showed that net finance costs rose by more than 407% year on year to N111.83 billion, leaving pretax profit at N166 billion, 13.3% above N146.82 billion the cement company posted in the comparable period in 2023.
At the end of Q1, Dangote Cement Plc declared net profit of N112.67 billion versus N109.50 billion the company posted 12 months earlier. Its earnings per share surged 3.8% to N6.68 from N6.44 in the prior period due to effects of share buyback program.
